What is payroll credit and what are its advantages for entrepreneurs
At some point in your journey as an entrepreneur, you'll probably need more capital. Whether to accelerate your growth or to cover a seasonal cash flow shortage (such as the one experienced by the COVID-19 pandemic), adequate financing can be decisive for small and medium-sized business owners. And that's where knowing what payroll credit is can make all the difference.
In fact, a study led by U.S. Bank concluded that the vast majority (82%) of companies close their doors because of poor cash flow management. Another survey provided by CB Insights shows that, in relation to startups, 29% they simply run out of money.
Due to this uncertain scenario, the search for ways to earn income grew. If you've ever tried to enter the world of entrepreneurship, you know that one of the main challenges is difficulty raising funds, and that's where knowing what payroll credit is can help.
According to the report on potential entrepreneurship from the Global Entrepreneurship Monitor (GEM), the number of Brazilians who intend to open a company, or a business, increased 75% in 2020. Around 50 million people are interested in having their own business. So, if this is your case, I ask you: do you already know where to start?
“Brazil was the country where the pandemic played the strongest role in boosting the growth of entrepreneurship in the long term, with growth well above the rate of the Netherlands, which came in second place, with an expansion of 42%”.
Carlos Melles, president of SEBRAE
So that you don't have any more doubts, in this article you will learn what payroll credit is, its importance for the initial capital of your company and some possibilities of using it for entrepreneurship.
What is payroll credit?
Payroll credit is a loan that offers good conditions and ease for the contractor. If you're looking for lower interest rates and more payment flexibility, this type of loan can help.
Without a doubt, this is an interesting alternative for those who need healthy credit, as it is more advantageous than other modalities on the market, such as the rotating of credit card, the overdraft and the personal check, for example.
In addition, the search for the payee is on the rise in the country, beating record in 2021 and reaching R$513.5 billion contracted. According to a survey released by the Central Bank, this is the highest amount ever recorded in this type of credit, which is often used to pay other debts with higher interest rates.
From the moment you request it, the amount of the installments is charged directly to the payroll or benefit of the INSS, which reduces the risk of default. That is, the discount is made directly on your company's salary or income. Therefore, it is aimed at individuals and for small and medium-sized companies.
With payroll loans you can open your business, pay off debts or invest in the growth of your business. This type of loan has become very popular in recent years and has become one of the best alternatives for SMEs.
In addition, the purpose of this loan is to provide democratized access to credit for entrepreneurs with financial difficulties and for low-income entrepreneurs. The Brazilian financial market needs income to flow, and for that to happen, investing in the capital of your company becomes a guarantee of this movement.
On the national scene, there are several facilities and forms of help for those who want to start a business. An example of this is the decree published in March of this year by the Federal Government, which released a popular microcredit line at low interest rates:
- For individuals with activities related to the provision of services: credit of up to R$1,000 that can be paid in up to 24 installments, with interest rates starting at 1.95% per month. The loan can be requested even by those who are negative;
- For individual microentrepreneurs (MEIs): credit of up to R$3,000 that can be paid in up to 24 installments, with a rate of 1.99% per month.
This initiative is part of the Digital Microcredit Simplification Program, SIM Digital, created by an interim measure signed by the president. However, for those who need larger amounts, payroll credit may be a good solution.
To assist the contractor in this type of credit, some technological implementations have been important. If you're in the financial sector, you've probably heard of the digital bank credit slip authorized in 2019. A “Digital CCB” It's a classic example of how technology works in this market: it's very easy to trade from anywhere, at any time.
In a similar way, signing documents online it is already popularly known for its disruptive and revolutionary nature. This is because it offers security equivalent to a physical subscription, in addition to convenience for its users - a process available via a website, completely electronic.
To further help you leverage your business, Clicksign and credit companies they have a harmonious relationship. With Clicksign Securities you can generate, endorse and sign CCBs electronically, bringing more efficiency to the operation and ensuring safety and legal compliance for those who use these operations.
How Creditas, the country's leading online lending platform, revolutionized its processes to gain more agility
Creditas, founded by the Spaniard Sergio Furio as BankFacil in 2012, was created with the purpose of enabling Brazilians to carry out their projects and achieve new financial achievements, through its operations throughout the national territory. In 2020, it became the country's leading online secured credit platform.
Its business model is based on four main products: home-secured loan, vehicle secured loan, private payee, and vehicle financing.
Thus, its digital DNA allows the use of technology to scale the business, optimize processes and improve the customer experience - without dispensing with personalized service, providing advice and offering exclusive content on finance and financial independence.
O Creditas success story It is the result of a partnership between the company and Clicksign, as there was a need for optimization in the company's legal department to monitor the full visibility and expansion of the brand.
As much as the company's processes are based on high technology, the use of contracts in a traditional way (physical material = paper) was still used and this required a lot of time and money.
The solution that best meets this need of Creditas is Clicksign Automation, since the company's objective was to facilitate the creation and management of contracts that have a high volume. Thus, more agility was gained, optimizing the time needed to complete, analyze and sign these documents.
“To give you an idea, in a single month the Creditas Legal Department signed more than 130 contracts. This is how, with convenience and speed, Clicksign Automation helped the area to gain efficiency in this process”.
With Clicksign Automation, it is possible to collect the data of the signers through a single link. You fill out a short form and that's it, all that's left is the signature. And this is done electronically, without having to print a sheet of paper. You can send the contract by e-mail, SMS, or, if you prefer, by Whatsapp. It's much more practical in your routine.
Regarding the benefits that the company obtained with our solution, Creditas said that its clients praised the speed of the process of filling out, analyzing and signing contracts. However, that's not all they said. They added that it is much easier to close partnerships and contracts so easily and quickly.
If this solution made sense to you, go to plans and prices for more information.
How can payroll loans benefit entrepreneurs?
If you want to undertake, have a business idea or want to expand your company, the ideal is that you have good financial planning. We know how difficult it is to reach this level and that is why payroll loans are an excellent alternative for small and medium-sized companies.
By definition, small and medium-sized enterprises (SMEs) are businesses where the number of employees and the number of revenues exceed what is established for a micro-enterprise, but at the same time they do not come close to being a large business.
It can be said that SMEs are businesses that can offer various types of services and that can be found in any neighborhood. Examples of this are bakeries, markets, offices, snack bars, beauty salons, and others.
Advantages of using payroll credit in your company:
- Low interest rates:
This type of credit is among the lowest interest rates in the market. Interest on private payroll loans starts at approximately 16.68% per year, according to data from Bacen.
The interest rates vary widely from institution to institution and the annual result of these installments makes it easier for entrepreneurs to pay. Thus, the risks for your company end up being minimal, since the installment is directly discounted and the chances of possible delays are lower.
- Ease of hiring:
Payroll loans have less red tape compared to other types of loans, since the amount of their installments is deducted from the payroll.
In practice, you deliver fewer documents and have short-term access to the money.
- Longevity of deadlines:
Debt reduction is easy, since the payment period, depending on the financial institution, can reach up to 96 months. That way, you can adjust the installments to your budget, in order to keep the business running until it starts to give a financial return.
Final thoughts: take a good look at the options available on the market
In Brazil, according to a Sebrae study, Small and Medium Enterprises (SMEs) account for more than 20 million businesses and generate more than 50% of the Brazilian workforce, making evident the importance of these companies for the national capital.
Now that you know what payroll credit is and how it can help you expand or open your company, it is crucial that, in order to succeed in this endeavor, you carefully analyze the options and forms of credit available in the market, looking at your budget and choosing the one that best meets your needs.
Finally, if, in addition to capital or knowing what payroll credit is, you are also looking for solutions that can reduce costs and accelerate the growth of your business, Clicksign can help you. Learn more about how Online Document Signing can revolutionize your processes, click here and talk to an expert.
